Hospital Network Competition and Adverse Selection: Evidence from the Massachusetts Health Insurance Exchange

Mark Shepard

No 22600, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Health insurers increasingly compete on their covered networks of medical providers. Using data from Massachusetts’ pioneer insurance exchange, I find substantial adverse selection against plans covering the most prestigious and expensive “star” hospitals. I highlight a theoretically distinct selection channel: these plans attract consumers loyal to the star hospitals and who tend to use their high-price care when sick. Using a structural model, I show that selection creates a strong incentive to exclude star hospitals but that standard policy solutions do not improve net welfare. A key reason is the connection between selection and moral hazard in star hospital use.

JEL-codes: I11 I13 I18 L13 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias and nep-sog
Note: EH IO PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published as Mark Shepard, 2022. "Hospital Network Competition and Adverse Selection: Evidence from the Massachusetts Health Insurance Exchange," American Economic Review, vol 112(2), pages 578-615.

Downloads: (external link)
http://www.nber.org/papers/w22600.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:22600

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w22600

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().